The Canadian Taxpayers Federation (CTF) recently released its annual New Year tax change calculations, which provide projected personal income and payroll tax changes that took effect on Jan. 1.
CTF researchers calculated the changes for a variety of income levels and family scenarios while adjusting 2009 income levels for inflation.
“The main tax changes for 2010 involve small payroll increases and the HST in Ontario and BC,” said CTF federal director Kevin Gaudet. “Meanwhile, large deficits and rising debt are putting pressures on governments to raise taxes further.”
Payroll taxes rising again
While the EI and CPP tax rates have not increased, their thresholds have.
That means anyone earning more than $47,200 will pay an additional $44 in payroll taxes in 2010.
“These payroll tax increases are likely just the tip of the iceberg as the federal government looks to run major EI surpluses through higher EI rates over the next few years,” continued Gaudet.
Business income taxes
The federal government continues to reduce business income taxes.
They drop to 18% from 19%.
In Ontario
Regarding Ontario, Gaudet noted a meagre move to lower the first bracket by a single point and meaningful reductions for business income taxes.
However, he pointed out those gains will be offset by substantial increases for individuals and families with the tax hike in the top two tax brackets and the new HST.
Turning to the rest of Canada, Gaudet stated, “They’re just coasting. There were few other major income or payroll tax changes.”
HST on its way
With the HST coming into force July 1, the federation is not exactly pleased with the amount.
“In B.C. and Ontario, the HST needs to be reduced by at least 2 percentage points,” said Gaudet.
In trying to appease voter anger over the HST, the Liberal government in Ontario is making a meagre adjustment to the first income bracket, moving it from 6.05% to 5.05% while completely offsetting most gains for Ontarians by increasing the thresholds for the two surtaxes in place.
For example, a family with a single earner and two children making $100,000 will save a paltry $106 due only to indexation amounts increasing greater federally and provincially than the CTF adjustments used for inflation.
In essence, Ontarians can expect a modest tax hike in terms of real income – not including the impact of the HST.
“The HST will eat up a sizable portion of Ontarian’s take-home pay,” Gaudet said.
“Rather than bribing taxpayers with a one-time cheque and raising surtaxes to wipe out the modest moves made in the first bracket, [Premier Dalton] McGuinty needs to lower the HST to as low as 10%, in a way that is fair to everyone,.” Gaudet concluded.
